Getting the right mortgage or remortgage deal can save you £100s. But ask your own bank or building society and it'll just try to flog mortgages from its very limited range, making it pot luck whether you get a good deal.
To beat this, we've built two techniques to quickly check the WHOLE market for free, and find the best deal for you.
We've just done a big update to this guide. We know there's lots of great knowledge among our readers, so please suggest any changes or questions in the Cheap Mortgage Finding discussion.
Mortgage finding need-to-knows
The bigger your deposit, the cheaper the mortgage deal
The best deals are available to borrowers with the lowest 'loan-to-value' ratios - that is, if you are borrowing a smaller percentage of what the house is worth.
So for instance, if you have a deposit of 40% or more, you can take your pick of mortgage deals. But if you only have 10% of the property's value saved, you have a more limited range of mortgages to choose from.
Where this comes into play as a big deal is if your savings come close to one of the big boundaries for rates getting lower - these are generally 90%, 75% or 60% LTVs (ie, 10%, 25% or 40% deposits).
If you currently have slightly less than needed to reach one of those (or any 5% boundary, as they all have some impact), it's worth trying to scrape together the extra. Or if you're buying somewhere new, shaving a little more off the cost to get you across the threshold.
If you’re at the top limit of a boundary (eg, 75% LTV), finding a little bit extra for the deposit to push you another 0.1% down (eg, to 74.9%) could improve your chances of acceptance. It could also reduce the amount of documentation the lender wants to see.
If you've an 'agreement in principle', you DON'T have to stick with it
If you followed our House Buying guide, you'll have an agreement in principle (AIP) from a lender already. But if it took you a while to find somewhere to buy, or to have your offer accepted, your AIP lender may no longer have the best rates.
However, an agreement in principle is just that. Importantly, it doesn't lock you into getting your mortgage with the same lender. Mortgage products can change daily, so if you've had an offer on a property accepted, then it could be time to search the market again.
And if you use a fees-free broker, you can get someone to do the legwork for you and not pay a penny (to them, at least).
Watch out for big fees - you can pay upfront but they'll cost more
It's no longer just about the rate when picking a mortgage - a myriad of fees come as part of the package.
Those that are part of the actual mortgage product itself (such as an arrangement fee, which can be as much as £2,000, and a booking fee, usually of up to a few hundred pounds) can normally be added to what you borrow.
There’s an advantage to adding the fees onto the mortgage. If your mortgage doesn’t go ahead for any reason, you won’t lose the fee. But if you pay upfront and decide to pull out of the mortgage application, you may lose it.
Be very careful though. The disadvantage of adding fees is you'll be paying them back over a long time. This really ramps up their overall cost, and could affect your LTV. There’s a way around this - check you can add the fees to the loan, then quickly overpay without penalty after the mortgage completes.
Other fees aren't paid to the mortgage lender, but are for other services such as home surveys, valuations and legal work. These usually CAN'T be added to the amount you borrow, so you need to pay the cash upfront.
Use our mortgage calculator to compare market-leading rates with big fees against the nearest deals with low or no fees. Larger loan sizes are affected less by big fees.
Fixed rates give long term surety of cost
As well as the cost (factoring in both rate and fees), the other key decision to make in terms of affordability is whether the rate you get is fixed, or variable (eg, discount or tracker rates), which can vary either at the bank's whim or in line with the Bank of England base rate.
The most important thing to remember always has been, and remains...
With a fixed rate, you have the surety of knowing EXACTLY what your mortgage repayments will be for that time.
In years past, the interaction between fixed and discount rates made this a potentially tricky decision. Right now the pendulum has swung more towards fixed deals, which are at their cheapest ever. In many cases they are lower than discount rates, even before any potential future increases to variable deals.
Interest-only means you NEED a separate plan to pay off your debt
With an interest-only mortgage, your monthly payment does not chip away at your actual debt. Instead, it just covers the cost of borrowing the money. After 25 years of paying the interest on a £100,000 loan, you'd still owe £100,000.
A repayment mortgage, while it costs more each month, has the big bonus that as well as covering the interest, it pays off the original debt too, meaning you'd owe nothing at the end.
Unless you have a compelling reason, repayment is the way forward. It's the only option which guarantees you're actually paying off some of your debt every month. With an interest-only mortgage, you just pay the interest.
Increasingly, the lender will want to see evidence of a convincing method you’ve set up (eg, savings) to build up enough cash to pay off the actual cost of the property - and you may need to get some proper financial advice.
Many lenders will also restrict the LTV size for an interest-only mortgage, while some won’t consider interest-only at all.
Brokers and lenders are rarely cheapest for add-on products you need
Mortgage brokers are a great way to find the right mortgage, and obviously you'll need to deal with a lender in order to get the money you need to borrow. However, there's absolutely no obligation for you to take ANY extra services from either of them.
Whether it is the costs of moving house - conveyancing, surveyors, etc - or add-on financial products such as home insurance or mortgage life insurance, you can often save many £100s a year by sorting them yourself. See the Cheap House Buying, Cheap Home Insurance, Mortgage Life Assurance and Mortgage Payment Protection guides for more info.
Your broker can advise you on mortgage schemes
Whether you're a struggling first-time buyer or just trying to move up the housing ladder, there are various Government-sponsored mortgage schemes which may be able to help you. Your broker can advise you on them.
The Mortgage Scheme Guide includes information on Help to Buy, NewBuy, shared ownership, 95% mortgages and more to help you get started. This isn’t like buying a property down the normal route however, there are certain rules and restrictions, so buying normally may still work out the best option for you.
Check off the essential things to know before applying
Getting a mortgage is never easy and sometimes knowing where to start is the first stumbling block. To help, we've pulled together a checklist to help Boost your Mortgage Chances.
Arm yourself with a free mortgage guide!
This guide is about how to find the cheapest mortgage deal, not about the decisions you need to take to decide what type you need. And while advisers are helpful, the final decision is always yours, and you should understand it fully.
To help, there are two detailed MoneySaving mortgage guides: one for first-time buyers and the other for those looking for a cheaper deal. Both are available either as a free printed guide sent by post, or as an instant PDF download.
Benchmark a top mortgage rate
Before starting, you need a quick idea of what's available so you know if what a broker's offering is a good deal or not. First, existing mortgage holders should see what their current lender's best deal is.
After that, and for new borrowers, the web's a powerhouse for benchmarking a good deal. Use these comparisons to find what's available with your deposit and intended property value.
|The top online mortgage information sources||Comparison services
(interactive mortgage picking services)
The Money Advice Service
|Best buy tables
(simple lists of top products, much quicker, but less tailored)
|Savills, London & Country|
How to find the cheapest mortgage
The crux here is that you want to cover every mortgage lender to find the mortgage that suits you best. There are two ways to do this - the first takes a little more work but is free, while the second charges a fee but should be slightly easier.
Both ways require using a broker, and below we explain how to find the one that suits you. The route you choose depends on where the balance lies for you between cost and hassle.
Mortgage brokers scour the market to find you a good mortgage deal. By using one, not only do you swiftly cover a huge slew of lenders, but a broker gives added clout with lenders to ease your acceptance and an extra layer of protection if things go wrong.
It's most important to find a broker you're comfortable with. The estate agents you meet when house hunting will often recommend brokers. They may even work from the same office. But crucially, you're not tied into using these, even if you buy via that estate agent.
Ask friends who've moved for recommendations - many local brokers are fantastic. The aim's to find you the best broker for the lowest possible price. But not all brokers are the same. Some are limited in what they can offer you, so there are three crucial questions to ask.
1 Are you 'whole of market'?Can it source you ANY UK mortgage?
Though this question sounds straightforward, there are (confusingly) actually three possible answers:
"NO." Some brokers are tied to one lender or operate off a small panel of lenders, so they search from fewer deals. This makes it simpler and cheaper for them to operate.
"We are ‘whole of market’… and we check all products available to brokers." The key point to note here is the last phrase - ‘available to brokers’. Confusingly, the ‘whole of market’ definition just means they have to check a wide enough range to be representative of the whole market, and not all lenders and products.
Many whole-of-market brokers will exclude lenders and products which are only offered directly to the public. This is largely because they won’t receive a commission, and additionally, they may not be able to submit an application on your behalf.
Lenders that don't offer all their deals through brokers.
A few lenders, including Nationwide and Halifax, sometimes put some deals through brokers, but only offer other deals direct. Just to show there's nothing like keeping things simple!
"We are ‘whole of market’… and we check all lenders.” Some whole-of-market brokers do check the direct deals described above. However, they are more likely to charge a fee.
In reality, it’s unlikely a broker could guarantee you access to EVERY mortgage in the UK, as exclusive deals can be arranged between lenders and brokers (and clubs that brokers can join).
Just be clear on what your broker is offering and weigh up the need to check everyone, your willingness to do some legwork yourself and your attitude to paying a fee.
As this is more than a little complex, to make sure you know exactly what you are getting, it may be better to refine the question to: "Could you, right now, source a mortgage for me from any UK mortgage lender?"
2 Are you qualified?Will you provide me with advice and a recommendation?
Make sure you’re getting advice from a qualified adviser. They will assess your needs and eligibility before recommending the most suitable product for you. This route also offers the most protection for you as a consumer.
If the advice turns out to be wrong, the Financial Ombudsman will be able to investigate any wrongdoing. If you chose a product yourself from an information-only service, you’d have no comeback if you made the wrong choice.
3 Do you charge a fee? How does the broker get paid?
Brokers have two possible sources of income.
Commission. Lenders pay brokers a 'procuration fee' of 0.25% to 0.5% of the mortgage's value, rising to 1% for mortgages if you've poor credit. So, on a £150,000 mortgage, brokers typically earn £375 to £1,500.
They are obliged to tell you the exact amount they’ll be paid before you apply. You can find this information on the Key Facts illustration, which they also must provide before you apply.
Fees. Brokers may also charge you a fee directly. This might be in addition to them keeping the commission, or instead of it (ie, if they refund you the commission).
If they offer you the choice between fee or commission, then they can call themselves ‘independent’. No reputable broker should charge more than around 1% of the mortgage value, even for 'sub-prime' customers. If yours charges more, walk away.
Fees can be charged at any point in the process, providing they inform you initially. Yet avoid using any broker that charges you big fees before completion; if you have to walk away from the purchase, you'll be likely to still have to pay them.
As this is a MoneySaving site, we've always said our preference is not to pay a fee if you don't have to. For this, you're looking for a fees-free whole of market broker, which makes its cash from commission but can search out a good deal from a wide range of lenders, then checking the non-broker deals on top.
However, there are two big instances when a fee may reflect good value for money.
If you want face-to-face advice... Then search your local area. Just make sure they're whole of market, and that any fee charged is affordable and value for money. It's not the worst thing to spend money on, especially to have someone you trust to get you a decent mortgage.
If you want one that finds 'non-broker' deals. When a broker recommends a mortgage not on normal 'whole of market' tables, they don't make commission. The brokers we've found which include ALL mortgages charge fees to compensate for the chance they won't get paid once they've found a deal.
Independent doesn't actually mean it's independent..!
Many brokers charge fees AND take commission. However, to call themselves an "independent mortgage broker", they must offer an option to pay fees only, with all the commission earned being rebated to the customer.
In practice, this is bunkum. What tends to happen is this: they offer to let you pay EITHER a "1% fee in full and rebate the 0.35% commission" OR they'll suggest you can just pay a "0.65% fee and keep all the commission". In other words, not a lot of difference.
Worse still, it means a truly whole of market broker fees-free broker (only taking commission), can't call itself independent, even though it is providing the same advice and is cheaper.
The top UK mortgage brokers
Now you know what you are looking for, as we can't review every mortgage broker in the UK, we've concentrated on some of the big ones that have nationwide scope, plus ways to find smaller brokers. Similarly, if you have any doubts about a broker, find a different one - there's nothing wrong with talking to several before you settle on one.
Fees-free, 'whole of market'*London & Country mortgages
- How do I speak to them? Phone only
- What lenders will they check? Officially 'whole of market', but misses some biggies
- Cost: FREE
Specialist phone broker London & Country* never charges a fee, and is a regulated 'whole of market' broker. This means it will check the vast majority of lenders, but for total coverage you will need to check the remaining ones yourself.
L&C has been a top pick on MSE for many years, and we have received consistently strong feedback from people who have used it. If you've used L&C, please let us know about your experiences.
The advantage of only dealing with lenders who make deals available through brokers is that L&C will be able to help you through the whole process, in terms of filling in forms, information and support. The brokers you deal with may also tell you about mortgages from lenders they can't deal with, but there's no absolute guarantee this will happen.
EVERY UK lender checked (up to £399 fee if you apply)Which? Mortgage Advisers
- How do I speak to them? Phone only
- What lenders will they check? Every UK lender
- Cost: £399 (£199 paid on application if you apply through Which? Mortgage Advisers, then £200 on completion)
Consumer organisation Which? has set up the Which? Mortgage Advisers service, which offers a phone-based broker service for £399. For the fee, it guarantees to check all lenders' deals, even if they are not normally available through brokers - so this includes perennially cheaper providers such as HSBC, Post Office, ING Direct and Tesco.
The flipside is that Which? won't be able to transact these deals for you - if it tells you about a deal where it can't handle the paperwork, and you decide to go ahead, you'll be on your own.
Also, we have hardly any feedback on this service so far. Even though Which? itself is a big name, there's no guarantee of how this will all work. So if you use it, please tell us your experiences.
The first £199 is paid when Which? Mortgage Advisers helps you apply for a mortgage, so beware that if something went wrong and you didn't complete the application, then that cash would be lost. You then need to pay another £200 on completion (£100 for Which? members).
Face-to-face advicefind a good local mortgage broker
- How do I speak to them? Face-to-face usually
- What lenders will they check? It depends on the one you find
- Cost: Varies massively, always check.
If you prefer face to face, try to find a local broker that offers it fees-free; there should be quite a few. Websites like Unbiased.co.uk or VouchedFor both list brokers. You could ask a friend or even use the phone book - but it's crucial you know what you're getting.
Give them a call, and ask the three questions in the picking a broker section to ensure they fit your bill. Make sure each broker you look at can advise from the whole of the market, and is fees-free (if that's what you're looking for)
For those wanting a more informal route, this website's forum includes a large Mortgage Board where some helpful mortgage brokers voluntarily answer questions - it's an easy non-committal starting option.
Many are fees-free, whole-of-market mortgage brokers, so if they do help you, there is no reason not to ask them to sort your mortgage for you (always ask them the three questions first, though).
However, as always, the golden rule is to seek more than one opinion before deciding.
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Got credit problems? No need to go specialist - use the brokers above
If you've had credit problems, whether mild or severe (see the Credit Ratings guide), and are trying to sort a mortgage, be very wary of going to the 'specialist poor credit' brokers who advertise everywhere.
These often charge very high fees as customers tend to think that's all they can get. There's absolutely no need to go to a specialist though; most normal brokers (including the ones listed above) also deal with what's called the 'sub-prime' market too, and at the same fee rates that they normally charge.
You can check more than one broker, to find all exclusive deals
All the national brokers above only charge upon completion of the mortgage, and as it's always good practice to seek more than one opinion, why not try a few? Though do check that the brokers aren't doing a credit search on your file, as then shopping around may actually hurt your credit score, meaning you get a worse deal (see Credit Scoring guide).
The other benefit of this is that different brokers often have exclusive deals from lenders (though there may be a small fee for 'booking' these). The big national brokers have their own deals and local brokers may offer exclusives via wider 'broker networks' which negotiate deals for them. Always weigh up the benefit of the exclusive deal against any broker fee you may need to pay.
Can you get cashback? You'll need to haggle with your broker
It's worth asking what commission your broker's getting for arranging the mortgage. This should be stated on the last page of the mortgage illustration they give you too - it's likely to be between 0.35% and 0.5% of the mortgage you're arranging. So on a £100,000 mortgage, the commission or 'proc' fee they get will be between £350 and £500.
It's worth asking if they're prepared to rebate any of their commission as cashback to you when the mortgage completes, especially if you're paying a fee for their services as well. You're more likely to be able to strike a deal on larger mortgages (where your fee plus their commission is more than £1,000), but the broker's well within their rights to say no, whatever the cost.
Sadly, some lenders have retreated from the broker market to cut costs and avoid paying commission. They fall into two camps: some simply don't allow brokers to access any of their deals, while others reserve a portion of their deals for direct sales only.
If you went with a broker that promises to tell you about all deals on the market, whether they get paid for them or not, this part should already have been done. It may be worth using a double check, but it's likely you've already found the best deal for you.
If you used a standard whole-of-market broker, it only has to look at the mortgages available to it, so while some whole-of-market brokers (including the ones mentioned above) will tell you if you can get a better deal available by going direct to a lender, there is no regulation forcing them to do this.
Lenders that don't operate through brokers.
The main ones are Barclays Direct (formerly ING Direct), Tesco Bank, Post Office, HSBC and First Direct. Plus the Yorkshire Building Society and Britannia don't pay brokers a fee, and while true whole of market brokers should include them in a comparison and signpost you to them, they don't have to offer to transact them for you.
Lenders that don't offer all their deals through brokers.
This is where it gets tricky, and you'll really need to do some legwork. A few lenders, including Nationwide and Halifax, now put some deals through brokers and offer some only direct, just to show there's nothing like keeping things simple!
This in itself isn't that new, but a recent trend is that the direct deals can be much more competitive (though not always!). Usefully, MoneySupermarket* and Google's* mortgage comparisons list the best deals for you, and then tell you if they're available through brokers or only direct.
Moneyfacts and the Money Advice Service mortgage searches also include most branch-only direct deals from lenders in their tables, so are great starting points to see if you can beat the broker deals.
Exclusive deals from other brokers.
In the final category are the deals which are available exclusively through other brokers, as they sometimes negotiate their own deals with lenders. Hopefully by trying a few brokers in the first place, you'll have already been through these.